Need and Cost of Long-Term Care

With the average life span of Americans continuing to grow, the likelihood that one will need long term care can also be expected to increase. Today monthly nursing home costs average $5,900 a month or around $60,000 to $70,000 a year, or more. While long-term care services at home may be significantly less costly, these still average around $1,600 a month.

Long-Term Care Insurance

A long-term care (LTC) policy may help you cover the cost of long-term care, allow you to retain greater independence, and provide relief to your children from the economic, physical, and emotional stresses associated with caring for an aged and/or ill parent. However, a LTC policy can be somewhat complicated. Below are some questions you will want to ask if you are thinking about purhasing a policy.

Services Covered

In addition to skilled nursing home stays does the policy cover assisted living, adult day care, in-home care, or a combination of these services?

Benefit Amount

What is the maximum cost per day that the policy will cover and for how long? Is there a maximum lifetime limit?

Eligibility

How does the policy define eligibility? Generally a health practitioner such as a doctor, nurse, or a social worker must declare one eligible for long-term care assistance. The policy definition of benefit eligibility however will stipulate how much assistance must be necesary for someone to qualify for the benefit. Usually one will qualify if they cannot do two or more activities of daily living, such as bathing, dressing, toileting, eating and moving in and out of a bed or chair, however the qualification may differ depending upon what levels of care are provided for in the policy. A cognitive impairment such as Alzheimer’s disease may also qualify one for long-term care.

Length of Benefit and Waiting Period

Usually the length of benefit and the waiting period are chosen by the policy owner when purchasing the policy and will determine the cost of the policy. Generally, 3 to 5 years is the common choice, for length of benefit, although if you are concerned about Alzheimer’s or other dementia you may consider greater coverage. A 60 day waiting period before benefits begin is also the standard, however you may select a longer or shorter waiting period or even no waiting period although this may increase your premium significantly.

Insurer

Who is the insurer and how is rated? Make sure the insurer is licensed to sell LTC insurance in your state and that it has a strong financial rating and a good reputation of service.

Tax-Qualified

Is the policy tax-qualified? If so, then you may be able to take the premiums off as a deductible on your taxes?

In my next blog, we’ll take a look at the cost of LTC insurance and look a little more at some of the options available.